As a foreign or even out of state investor, you will need to know HARPTA and FIRPTA tax withheld.

HARPTA is 5% of the sales price, and FIRPTA is 10% of the sales price. These amounts are withheld to pay any Capital Gains taxes that may be due upon the sale of the property. The foreign owner must file for payment of taxes on any capital gain, and the amount collected under HARPTA and FIRPTA is used to pay the capital gain tax. The foreign owner may get a refund if the amount withheld is higher than the capital gains tax. Capital Gains taxes are not income taxes. The Capital Gains tax is a fixed percentage and does not depend on earnings. State is 7.25% and the Federal is currently 18.6%.

Keep in mind that the 5% and 10% is calculated on the sales price. These amounts are withheld by escrow, and the investor has to file tax forms with both the State and the Federal Government to get any refund.

Note: We recommend the buyer to talk to a licensed CPA person to understand the refund process.

1. Your rights as a buyer are very limited when dealing with a short sale property.

Even if the seller accepts your offer and signs the contract, the lender must provide the final approval for the transaction. We have seen short sales in which the lender has cancelled the transaction on the same day that it was set to close. This can be very disappointing and costly because buyers have no recourse, and are unable to recoup any of the costs incurred during the escrow period such as home inspections and appraisals which can end up costing the buyer thousands of dollars.

2. Your closing date should be flexible.

The short sale transaction process is anything but short. We have seen short sales in where it has taken up to 6 months to process and close the transaction. This time lag can be especially detrimental in today’s buying environment, where interest rates can change at any time. An increase in interest rate during the escrow period can adversely affect your mortgage payment amount by several hundred dollars per month, which may result in the property becoming unaffordable for you.

3. Short sale sellers try to secure as many offers as possible — even after they have an accepted contract — which keeps buyers in limbo.

Normally, when a seller accepts an offer, the status of the listing is changed from “Active” to “Pending.” The difference with short sales is that in most cases, the seller will keep the property marked as “Active” after accepting an offer, with the intent of attracting more buyers so that they can get an offer that is higher than the one they initially accepted from you. If they do receive an offer higher than yours, the bank is extremely likely to accept that higher offer, and you would essentially be out of luck. We have seen short sale transactions in which up to 3 buyers have all had accepted offers from the same seller, and all 3 buyers had to wait months to hear back from the lender as to which of the offers the lender would accept.

4. You will need to bring additional funds to the closing table to pay for the seller’s closing costs.

In a normal real estate transaction the seller pays their own closing costs, which include termite reports, title fees, recording fees, and pro-rated property taxes. In a short sale, the buyer may need to pay for most or all of the seller’s closing costs because there is no equity for the seller to use to pay for their closing costs.

5. You will need to do a lot of follow-up.

It is essential to monitor the lender during a short sale to make sure that there has been a stay placed on the foreclosure action. This information can be difficult to attain, and if the property isn’t monitored effectively, it could go into foreclosure, and be taken off the market — even if the seller has accepted your offer. Once again, having a me or my recommended specialist to work on your team can save you time and leg work.

6. Your closing must be completed quickly.

Though approval from the lender can take several months to receive, once the lender accepts your offer, you must close the transaction within 14-21 days. If closing does not occur in that time frame, a fee of $150 per day paid can be assessed to you, the buyer.

7. The Seller is not likely to make repairs, replacements, or even clean the property.

In a short sale transaction, the real seller is the lender. If the short sale property has defects and needs repair, the lender may be unwilling to pay for them. If once you're in escrow, you find out through a home inspection that the home needs a new roof or has foundation damage, you will have to pay for these repairs if you want to close. As a buyer, you have the option to cancel the transaction based on the home inspection, but if you want the property, the cost of any repairs falls on you.

From 1971 to 2013, we are seeing the lowest mortage interest rate ever in history. However as you may or may not low this low interest is not here forever and is artificially made by the Fed that continues to purchase USA bonds in order to stimulate the houseing market and the economy today. in 2008, Fed starts to purchase lots of toxic mortagages to save the collapsing housing market and banks. Have you thought about what if the Fed stops or decreases its buying of USA bonds? It is why we say today's low interest rate is made artificially and will not stay forever.

Just recently we saw the news regarding how the Fed is starting to consider tapering the stimulus program, and it sent the interest rate back to 4.25% for Hawaii on a 30 year fixed mortagage toward the end of June. A quarter percentage jumps can affect your monthly payment for the mortgage if you were not able to lock in the morgage rate at a lower rate previously.

This historic low interest rate on mortgage enables many people who are currenly renting to get a loan to buy a place where their mortgage payment would be equal or even less than what they are paying for the rent today. This creates competition for the already low inventory of housing on the market today. Increasing demand and lowering supplies will create competition and bid up.

Bid up is a term used to describe where there are multiple offers over the listing asking price. Please refer to the bid up article for more info.

This graph looks back 32 yrs of home/condo inventory on the market in Hawaii. As you can see both the single family home and condo number on the market is at its lowest by the end of 2012. This phenomenon is seen again in 2013 where in April we had again hit the lowest inventory number on the housing market.

The implication of which is that supply is low when there are lots of buyers seeking to purchase in todays market. Please look at the interest comparison chart over the years to further understand today's market.

Greetings! Selling your home involves many steps, and I can help you every step of the way. From consultation to pricing, and marketing to escrow, I will take care of all the details so you can sell your home at a price that makes you feel comfortable. I offer a high level of expertise, tailored to fit the characteristics of your property. As a Prudential Locations' agent, I have many established relationships, as well as access to numerous resources that you will benefit from directly.

As your agent, I will assist you in all stages of the selling process, from the marketing of your home and purchase offer through closing. I will help coordinate advertising, open houses, professional inspections, generate progress reports, and contract negotiations. I will handle coordination of showings, escrow monitoring, closing, and recordation.

When you are ready to sell, I would welcome the opportunity to represent you. My focus is directly on providing the highest quality of service. In the meantime, I will send you valuable information so that when you are ready, you will find it a comfortable process. All you'll have to worry about is packing!